Climate related risk is recognised by business as one of the most material issues. Apart from greenhouse gas reporting, responses to understand risks and opportunities to business, implement mitigation action and report on performance are largely immature in the market. Inertia has in part been driven by policy uncertainty – a lack of a bipartisan position on climate change and absence of long-term carbon and renewable energy targets beyond 2030.
In the past 6 months we've seen:
This changing landscape requires urgent action by companies. Directors should:
Identify the climate change risks and opportunities impacting the company in the short, medium and long term. Consider regulatory, transitional and policy risks in the different markets in which the company operates and the exposure to both the business operations and critical supply chains, particularly under conditions consistent with the 2 degree global ambition.
Understand and analyse how these risks can impact on the strategy, operations and ongoing profitability of the businesses. Companies should demonstrate the level of rigor applied to comprehensively evaluating exposures.
Respond by implementing actions to manage risks and opportunities and explain how the scale of response is consistent with the organisation’s risk appetite.
Disclose progress on addressing risks and the processes put in place to manage them, including the selection of metrics and tracking against targets, the ambition of which should also be justified.
KPMG can assist businesses to address the business risks as well as and compliance with APRA expectations, legal obligations and the recommendations of the Financial Stability Board’s TCFD through: